My School's Default Ratio?

When a student has a consolidation loan, the school can determine his or her remaining loan eligibility by using the original principal loan amount minus any payments made.

Note: The outstanding balance on the subsidized and unsubsidized portions of the consolidation loan is considered when determining the borrower's subsidized and unsubsidized loan limits. For example, if a consolidation loan contains an unsubsidized portion, the outstanding balance on the unsubsidized portion of the consolidation is considered in determining the borrower's unsubsidized loan limit.

Schools can determine the subsidized and unsubsidized portion of the consolidation loan:

1. reviewing the borrower's consolidation paperwork.
2. contacting the Loan Origination Center/ Loan Consolidation Department.
3. using the National Student Loan Data System (NSLDS).

If data is available on NSLDS, schools may be able to view the underlying loans in the consolidation loan to determine the loan type. Schools can access NSLDS online and find the loans that were paid off through consolidation by selecting all loans with a status code of PC (paid through consolidation).

Once the school has determined the types and original amounts of the underlying loans, it must prorate the outstanding principal balance amount on the consolidation loan in the same ratio that each of the "PC" original loan amounts is to the original consolidation loan amount. For example, assume that a borrower's original principal balance was composed of 25% subsidized loans and 75% unsubsidized loans. The school can assume that 25% of any remaining unpaid balance is subsidized and would be counted towards the borrower's subsidized aggregate loan limit and 75% towards the borrower's unsubsidized aggregate loan limit.